A hostile takeover occurs when the acquiring company attempts to take over the target company against the wishes of the target company’s management.
The acquiring company can achieve a hostile takeover by going directly to the shareholders of the target company or by fighting to replace its management.
Hostile takeovers can take place if the company believes that the target is undervalued, or when active shareholders want changes in the company.
Bidding and proxy fighting are two methods of achieving a hostile takeover.
Targeted companies can use certain defenses such as poison pill or golden parachute to prevent hostile takeover.